119-hr1996

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1996 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1996

To amend the Employee Retirement Income Security Act of 1974 to clarify 
 the application of prudence and exclusive purpose duties to the 
 exercise of shareholder rights.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 March 10, 2025

Mrs. Houchin (for herself, Mr. Owens, and Mr. Grothman) introduced the 
 following bill; which was referred to the Committee on Education and 
 Workforce

_______________________________________________________________________

 A BILL

To amend the Employee Retirement Income Security Act of 1974 to clarify 
 the application of prudence and exclusive purpose duties to the 
 exercise of shareholder rights.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Retirement Proxy Protection Act''.

SEC. 2. EXERCISE OF SHAREHOLDER RIGHTS.

    (a) In General.--

Section 404 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end 
the following new subsection:
 ``

    (f) Exercise of Shareholder Rights.--
 ``

    (1) Authority to exercise shareholder rights.--
 ``
        (A) In general.--The fiduciary duty to manage 
 plan assets that are shares of stock includes the 
 management of shareholder rights appurtenant to those 
 shares, including the right to vote proxies. When 
 deciding whether to exercise a shareholder right and in 
 exercising such right, including the voting of proxies, 
 a fiduciary must act prudently and solely in the 
 interests of participants and beneficiaries and for the 
 exclusive purpose of providing benefits to participants 
 and beneficiaries and defraying the reasonable expenses 
 of administering the plan. The fiduciary duty to manage 
 shareholder rights appurtenant to shares of stock does 
 not require the voting of every proxy or the exercise 
 of every shareholder right.
 ``
        (B) Exception.--This subsection shall not apply 
 to voting, tender, and similar rights with respect to 
 securities that are passed through pursuant to the 
 terms of an individual account plan to participants and 
 beneficiaries with accounts holding such securities.
 ``

    (2) Requirements for exercise of shareholder rights.--A 
 fiduciary, when deciding whether to exercise a shareholder 
 right and when exercising a shareholder right--
 ``
        (A) shall--
 ``
            (i) act solely in accordance with the 
 economic interest of the plan and its 
 participants and beneficiaries;
 ``
            (ii) consider any costs involved;
 ``
            (iii) evaluate material facts that form 
 the basis for any particular proxy vote or 
 exercise of shareholder rights; and
 ``
            (iv) maintain a record of any proxy vote, 
 proxy voting activity, or other exercise of a 
 shareholder right, including any attempt to 
 influence management; and
 ``
        (B) shall not subordinate the interests of 
 participants and beneficiaries in their retirement 
 income or financial benefits under the plan to any non-
 pecuniary objective, or promote non-pecuniary benefits 
 or goals unrelated to those financial interests of the 
 plan's participants and beneficiaries.
 ``

    (3) Monitoring.--A fiduciary shall exercise prudence and 
 diligence in the selection and monitoring of a person, if any, 
 selected to advise or otherwise assist with the exercise of 
 shareholder rights, including by providing research and 
 analysis, recommendations on exercise of proxy voting or other 
 shareholder rights, administrative services with respect to 
 voting proxies, and recordkeeping and reporting services.
 ``

    (4) Investment managers and proxy advisory firms.--Where 
 the authority to vote proxies or exercise other shareholder 
 rights has been delegated to an investment manager pursuant to 
 

section 403

    (a) , or a proxy voting advisory firm or other person 
 who performs advisory services as to the voting of proxies or 
 the exercise of other shareholder rights, a responsible plan 
 fiduciary shall prudently monitor the proxy voting activities 
 of such investment manager or advisory firm and determine 
 whether such activities are in compliance with paragraphs

    (1) and

    (2) .
 ``

    (5) Voting policies.--
 ``
        (A) In general.--In deciding whether to vote a 
 proxy pursuant to this subsection, the plan fiduciary 
 may adopt a proxy voting policy, including a safe 
 harbor proxy voting policy described in subparagraph
        (B) , providing that the authority to vote a proxy shall 
 be exercised pursuant to specific parameters designed 
 to serve the economic interest of the plan.
 ``
        (B) Safe harbor voting 

=== policy ===
-With respect to a 
 decision not to vote a proxy, a fiduciary shall satisfy 
 the fiduciary responsibilities under this subsection if 
 such fiduciary adopts and is following a safe harbor 
 proxy voting policy that--
 ``
            (i) limits voting resources to particular 
 types of proposals that the fiduciary has 
 prudently determined are substantially related 
 to the business activities of the issuer or are 
 expected to have a material effect on the value 
 of the plan investment; or
 ``
            (ii) establishes that the fiduciary will 
 refrain from voting on proposals or particular 
 types of proposals when the assets of a plan 
 invested in the issuer relative to the total 
 assets of such plan are below 5 percent (or, in 
 the event such assets are under management, 
 when the assets under management invested in 
 the issuer are below 5 percent of the total 
 assets under management).
 ``
            (C) Exception.--No proxy voting policy adopted 
 pursuant to this paragraph shall preclude a fiduciary 
 from submitting a proxy vote when the fiduciary 
 determines that the matter being voted on is expected 
 to have a material economic effect on the investment 
 performance of a plan's portfolio (or the investment 
 performance of assets under management in the case of 
 an investment manager); provided, however, that in all 
 cases compliance with a safe harbor voting policy shall 
 be presumed to satisfy fiduciary responsibilities with 
 respect to decisions not to vote.
 ``

    (6) Review.--A fiduciary shall periodically review any 
 policy adopted under this subsection.''.

    (b) Effective Date.--The amendments made by subsection

    (a) shall 
apply to an exercise of shareholder rights occurring on or after 
January 1, 2026.
 <all>